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Boulder's Stratus Consulting played key role in Ecuador oil field fight

An acclaimed Boulder environmental consulting firm finds itself in the middle of an international legal controversy involving oil giant Chevron and sensational allegations of fraud, bribery, extortion and corruption by various parties in the case.

Stratus Consulting holds a reputation as an influential researcher on environmental issues. Stratus officials were part of a team that won the 2007 Nobel Peace Prize for studying the effects of climate change.

But the 15-year-old firm has been on the defensive since it was sued in 2011 by Chevron for racketeering and fraud related to Stratus' study of oil field pollution in Ecuador's Amazon rain forest.

Stratus Consulting now is viewed variously as either a victim of Chevron's legal pressure or as a company that was complicit in a fraudulent scheme to influence a major pollution trial.

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Stratus officials declined to be interviewed for this article. Analysts say that the firm, at the least, suffered a public-relations hit and huge legal costs. At worst, Stratus may lose business and prestige because of the controversy.

"Stratus was flat on its back with millions of dollars in legal fees" and a likelihood of losing the Chevron case, said Bill Hamilton, a spokesman for the Amazon Defense Coalition, an environmental advocacy group following the case. "They were between a rock and a hard place, and they had to make some difficult choices."

The saga began in 1993 when a group of Ecuadorian citizens filed suit against Texaco for water and soil pollution stemming from oil exploration and production.

The case lingered for years under a series of venue changes and thousands of pages of procedural filings. Chevron inherited the case along with its acquisition of Texaco.

In 2008, lawyers for the Ecuadorian plaintiffs hired Stratus as an expert consultant to help determine the magnitude of the alleged environmental damage.

Stratus found that contamination existed at more than 900 oil field pits, 356 well sites and 22 oil processing stations. In a court document, Stratus described the pollution as "a huge amount of environmental damage costing immense sums to remediate."

In 2011, an Ecuadorian court ruled in favor of the plaintiffs and issued a $19 billion judgment against Chevron.

Shortly before the ruling, Chevron filed suit against Stratus and attorneys for the plaintiffs. Chevron said it had "produced overwhelming evidence of fraud, collusion, corruption and other misconduct on the part of those pressing the ... plaintiffs' case."

In addition to filing legal action, Chevron sought to undermine Stratus by writing critical letters to the firm's clients. For example, a Chevron attorney wrote to the Portland Harbor Trustee Council, saying that "because of the extensive evidence of corrupt activity on the part of Stratus ... Chevron believes that it would be in the best interest of all the parties involved at the Portland Harbor Site for the Trustees to sever ties with Stratus."

A Chevron spokesman did not reply to a request for comment.

Stratus initially fought back against Chevron. In a 2011 statement, Stratus defended its work in Ecuador and said the oil giant was "using vast corporate resources to intimidate and wear down opposing views and to avoid and confuse the technical and factual realities of its actions in Ecuador."

But last month, Stratus abruptly changed course. It said in a statement that the Ecuadorian plaintiffs' legal process was "tainted" and that the company "deeply regrets its involvement in the Ecuador litigation."

Boston attorney Theodore Folkman, who has blogged extensively on the case, said Stratus "kind of fell on their sword, obviously in an attempt to avoid liability. There was certainly a lot of pressure on Stratus to settle."

Stratus co-founder and executive vice president Douglas Beltman, who headed the firm's Ecuador study, stated in an affidavit that he "disavow(s) any and all findings and conclusions in all of my reports and testimony on the Ecuador project. I deeply regret that I allowed myself and my company to be used in the ... litigation in the way that we were."

Beltman was subsequently fired by Stratus.

"I did not leave the company voluntarily," Beltman said last week. "I can only say that I'm disappointed with how it ended. I'm disappointed with where the relationship is now."

Beltman said he has retained an attorney, but he would not comment on whether he is considering legal action against Stratus.

Stratus' disavowal of its work has made the firm a target of recent criticism from the American Resources Policy Network, a mining advocacy group.

In a letter to members of Congress and the White House, the group said the Environmental Protection Agency should conduct a "thorough review of its relationship with Stratus Consulting, including work contracted directly to the firm and its employees."

Settling with Chevron has not cleared all of Stratus' legal issues.

Last month, the Ecuadorian federal government filed a request to issue subpoenas for Stratus officials to testify in Ecuador's efforts to collect damages for the pollution.

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